If you’re looking to buy a home in Franklin, TN, you may be considering different types of mortgages, such as fixed rate mortgages and adjustable rate mortgages (ARMs). Understanding the differences between these two types of mortgages can help you make an informed decision that aligns with your long-term financial goals.
Fixed rate mortgages in Franklin, TN offer the benefit of a predictable monthly payment that stays the same throughout the life of the loan. This can make it easier to budget and plan for the future. Fixed rate mortgages tend to have slightly higher interest rates than ARMs, but that changes with the market and many times fixed rate mortgages will still have lower rates and more security than adjustable rate mortgages.
One of the biggest advantages of an ARM is the potential for a lower interest rate initially. Depending on varying market conditions, ARM loans can have a slightly lower introductory interest rate. This can result in a lower monthly payment, which can help you qualify for a larger loan. However, it’s important to remember that the interest rate on an ARM can change over time, which can lead to a higher and unexpected monthly payment based on market movement. If you plan to keep your home for an extended period of time, an ARM is usually viewed as a more risky choice due to the potential rise in interest rates.
When it comes to choosing between a fixed rate mortgage and an ARM in Franklin, TN, it’s important to consider your long-term financial goals. If you plan to stay in your home for a long time, a fixed rate mortgage may be the better choice, as it offers the stability of a consistent monthly payment. On the other hand, if you plan to sell your home or refinance before the interest rate adjusts, an ARM may be a viable option.
Ultimately, the decision between a fixed rate mortgage and an ARM will depend on your individual financial situation and goals. If you’re unsure which option is right for you, it’s a good idea to speak with a mortgage broker who can help you weigh the pros and cons of each type of mortgage and the financial benefit of each one. By doing so, you can feel confident that you’re making the best choice for your financial future here in Franklin, TN.